Amines & Plasticizers Ltd Management Discussions

Global Economy

The global economy experienced moderate growth of 3.3% in 2024, signalling a period of relative stability coupled with ongoing constraints to expansion. In FY25, policy adjustments have become necessary as geopolitical tensions and economic pressures intensify. The introduction of new tariff measures by the United States prompted immediate and decisive responses from many countries, culminating in the establishment of near universal tariffs from April 2025 and resulting in tariffs reaching levels not previously witnessed. These actions have imposed considerable pressure on global GDP, with the broader economic impact remaining uncertain. This overhang is likely to persist in the global growth outlook.

Such developments have significantly heightened economic uncertainty whilst rendering the short-term outlook highly volatile. The reliability of traditional forecasting models has diminished, as it has become increasingly challenging to base estimates on historical assumptions. Within this environment, global headline inflation is projected to moderate at a slower pace than earlier anticipated, with expectations of a decline to 4.3% in 2025 and further easing to 3.6% in 2026.

This revision reflects upward adjustments in inflation projections for advanced economies, partially balanced by smaller downward revisions in emerging markets and developing nations.

Although uncertainties remain, many economies have shown remarkable adaptability, confirming that recovery can be achieved through proactive reforms, robust institutions and coordinated policy initiatives. Achieving a more balanced and sustainable global recovery will require a shared commitment to transparent trade practices, timely debt resolution and addressing key structural imbalances. Stronger international collaboration and collective resolve remain pivotal in enabling the global economy to regain momentum and pursue sustained, inclusive growth.

Indian Economy

India remained the worlds fastest-growing major economy in FY25 with GDP increasing by 6.5%.

Despite experiencing global headwinds such as trade disruptions, geopolitical developments and volatility in financial markets, the Indian economy demonstrated remarkable resilience. This was underpinned by robust macroeconomic fundamentals, policy continuity and a sound monetary system. Growth was primarily driven by substantial public sector investments and large- scale infrastructure development, effectively offsetting muted private consumption. The governments emphasis on capital expenditure across transportation, energy and digital infrastructure provided continued momentum even as household spending faced intermittent pressures from elevated inflation.

Policy efforts consistently promoted a transparent and rules-based environment, fostering both investment and innovation. Structural reforms targeting manufacturing, improved domestic supply chains, rapid digital adoption and sustainability remained at the forefront. The nations medium- and long-term policy direction is guided by the vision of achieving Viksit Bharat (Developed India) by 2047.

Looking ahead, the RBI has projected GDP growth at 6.5% for FY26, with inflation anticipated to remain within its 4% target bandwidth, supported by stable commodity prices and steady demand. While macroeconomic and financial indicators are robust, risks such as global uncertainties and evolving geopolitical dynamics could influence market sentiment and trade. Nevertheless, Indias ongoing reforms and resilient economic foundations establish a strong platform for sustained growth and development.

Global Chemical Industry

The global chemical industry entered a recovery phase in FY24 and FY25 following a pronounced downturn in 2023. In that year, sector revenues declined by 8% year-on-year amid widespread destocking and muted end-market demand, leading to the lowest operating margins observed since the 2008-09 recession (Deloitte). Industry-wide cost optimisation initiatives contributed to margin improvements by the first half of 2024, enabling a return to growth. According to the American Chemistry Council, global chemical production rose by 3.4% in 2024 and is forecast to grow by 3.5% in 2025 (Deloitte). In value terms, the global chemicals market is expected to reach approximately USD 6.324 trillion in 2025, up from USD 6.182 trillion in 2024, reflecting a 2.3% annual increase (MarketsandMarkets).

Sector growth has been propelled by stabilising energy and feedstock prices and a resurgence in demand from key sectors such as automotive and electronics.

The operating landscape in FY25 is shaped by efforts towards innovation, sustainability and digitalisation, with significant investments in decarbonisation technologies, efficiency enhancements and advanced digital tools. Notably, there is a greater strategic focus on specialty chemicals and customised solutions, given their higher margins relative to commodity products.

However, the outlook remains mixed due to macroeconomic uncertainties, evolving trade policies and ongoing supply chain reconfigurations (MarketsandMarkets). The Asia Pacific region, driven by China and India, continues to anchor growth, while Europes recovery remains subdued. Persistent overcapacity, particularly in petrochemicals, alongside soft demand in several value chains, constrains pricing and margin recovery. Fitch Ratings has assigned a "neutral" sector outlook for 2025, citing these dynamics (Indian Chemical News). In this environment, companies are prioritising cost efficiency, supply chain resilience and innovation in sustainable products to maintain their competitive edge and long-term growth trajectory.

Indian Chemical Industry

Indias chemical industry stands as a vital pillar in the countrys manufacturing sector, contributing approximately 7% to the national gross domestic product. The industry supplies essential raw materials to key sectors such as agriculture, pharmaceuticals, textiles, automotive and construction, underscoring its strategic importance in the domestic industrial ecosystem. India has firmly positioned itself as the sixth-largest producer of chemicals in the world, and the third-largest in Asia. The domestic chemical market was valued at approximately USD 220 billion in 2023. This robust growth trajectory is expected to continue, with market size projected to reach between USD 400 and 450 billion by 2030 and further rising to USD 850

to 1,000 billion by 2040, subject to supportive policy frameworks and infrastructure advancements.

Despite an encouraging outlook, Indias global presence remains relatively modest, with a share in global chemicals consumption of just 3 to 3.5% as of 2023.

The sector has benefitted from industry-wide policy reforms, including the implementation of Goods and Services Tax, greater liberalisation of foreign direct investment and strategic programmes such as Make in India and Aatmanirbhar Bharat. The extension of Production-Linked Incentive schemes to targeted sub-segments has further fostered manufacturing capabilities. However, critical challenges have constrained growth. Notably, the high reliance on imports for petrochemical intermediates and speciality chemicals has resulted in a significant trade deficit. Limited integration with domestic feedstock sources, combined with a predominant focus on commodity chemicals, has impeded advancement up the value chain. Infrastructure limitations, such as inadequate feedstock supply, insufficient shared industrial facilities and logistics inefficiencies, continue to elevate operational costs.

Looking ahead, Indias chemical industry is poised for substantial expansion. The domestic market exhibits strength, supported by increasing population, higher disposable incomes and accelerated urbanisation. Demand from end-use sectors including consumer goods, automotive, healthcare and agri-inputs continues to offer significant opportunities for growth. Favourable government policy, investment in integrated petrochemical clusters, and improvements in logistics and port infrastructure are expected to address structural constraints progressively. Enhanced focus on energy security and domestic feedstock availability will aid in reducing import dependence. Furthermore, the promotion of green chemistry practices and adoption of circular economy principles are set to underpin sustainable and long-term industry competitiveness.

Opportunities

Enhanced Innovation andTechnical Capabilities

Indias chemical sector has undergone significant transformation in research and development infrastructure, with companies substantially increasing investments in process engineering and product innovation. This evolution addresses the historical technical expertise gap that previously constrained complex specialty chemical production capabilities. The development of indigenous R&D competencies positions Indian manufacturers to create value- added solutions that improve operational efficiency, reduce environmental impact and respond effectively to evolving customer specifications across multiple industrial applications.

Sustainability-Driven Market Leadership

The global shift towards environmentally sustainable practices presents strategic advantages for companies adopting green chemistry principles and renewable feedstock utilisation. Indian manufacturers increasingly align operations with international Environmental, Social and Governance standards, enhancing their competitiveness in export markets whilst meeting stringent regulatory requirements. Integration of advanced technologies such as artificial intelligence and 3D printing capabilities enables more efficient production processes, optimised supply chain management and accelerated research timelines, creating operational agility essential for market responsiveness.

Demographic Dividend and Consumption Growth

Indias expanding population base, coupled with rising middle- class affluence and increased per capita consumption patterns, generates sustained demand for chemical products spanning basic chemicals, polymers and performance materials.

This demographic advantage supports long-term market expansion across consumer goods, agricultural applications and pharmaceutical sectors, providing a stable domestic foundation for industry growth.

Strategic Export Market Positioning

Indias competitive manufacturing cost structure, skilled workforce and improving adherence to international quality standards establish the country as a preferred global supplier. The ongoing diversification of international supply chains presents significant opportunities for Indian chemical manufacturers to capture market share previously concentrated in other regions. Enhanced export capabilities, supported by robust manufacturing infrastructure and regulatory compliance, enable companies to leverage global market opportunities whilst reducing dependence on domestic demand fluctuations.

Growth in Gas Treating and Oil Field Chemicals Segment

Gas Treating and Oil field chemicals have become a significant sector within Indias specialty chemicals market, serving crucial roles in oil production, drilling and exploration activities. The rising focus on domestic oil exploration and production has led to increased demand for solutions such as friction reducers, corrosion inhibitors and demulsifiers, all essential for enhancing recovery rates and operational efficacy.

Threats

Raw Material Availability and Pricing Volatility

The procurement of key raw materials such as ethylene oxide presents a significant challenge, as import restrictions necessitate domestic sourcing. Ethylene oxide, due to its highly inflammable nature, must be secured from local suppliers. The sector is exposed to fluctuations in the prices of raw materials, which may directly impact the margins.

Any disruption in supply or unpredictable movement in cost structures requires close monitoring and agile management responses.

Competitive Pressures

The chemical industry faces intense competition from international players, with exports particularly vulnerable to offerings from established producers in China. The necessity for continual enhancement of cost efficiency and product quality is imperative to maintain market relevance and defend market share. Price competition, technological capabilities and scale of operations from foreign entities may pressure domestic manufacturers to further invest in operational excellence.

Health, Safety and Environmental Risks

The nature of chemical manufacturing exposes the Company to a spectrum of safety risks, including potential chemical spills, environmental pollution and occupational hazards. Such incidents may result in legal liabilities, regulatory scrutiny and reputational harm. Comprehensive safety protocols, compliance with rigorous environmental standards and ongoing employee training are essential to mitigate these risks and safeguard corporate reputation.

Economic Uncertainty

Periods of economic instability can adversely affect industrial output and dampen demand for chemical products. Factors such as currency fluctuations, inflationary pressures and changes in global trade dynamics arising from geopolitical developments increase overall market risk.

The persistence of uncertain economic conditions requires the Company to remain vigilant and adaptive in its strategic planning and risk management approaches.

Technological Advancements and Disruptions

Accelerated technological change in the chemicals sector holds the potential to render existing processes and products obsolete. The emergence of advanced manufacturing technologies, new materials and changing customer preferences necessitate continual investment in research and development. Failure to keep pace with such innovation may threaten the Companys competitive position and longterm growth prospects.

Company Overview

Amines & Plasticizers Limited (APL), established in 1973 and headquartered in Mumbai, has built a distinguished position as a manufacturer of speciality amines and chemical intermediates for key industrial applications. Operating from two strategically situated manufacturing facilities in Maharashtra, APL produces a comprehensive portfolio that includes ethanolamines, alkanolamines, alkyl alkanolamines, morpholine derivatives and advanced gastreating solvents. These products play an essential role across sectors such as oil refining, petrochemicals, pharmaceuticals, agrochemicals and textiles.

APL pioneered the indigenous development of methyl diethanolamine (MDEA) in India, now recognised as a benchmark solvent for CO₂ and H₂S removal in refineries and gas-processing plants. The Company stands among the leading global producers of MDEA-based solvents and high-purity N-methyl morpholine oxide (NMMO), vital for cellulose-based fibres and pharmaceutical formulations. Robust manufacturing infrastructure incorporates advanced synthesis routes, continuous-reaction systems and stringent analytical protocols, ensuring compliance and consistent quality.

Longstanding customer relationships, technical expertise and in-house R&D drive APLs ability to innovate and introduce new import-substitute molecules, environmentally focused chemistries and bespoke solvent solutions for emerging markets, including carbon capture and green hydrogen. Serving clients in over 85 countries, APL remains focused on anticipating future industry needs and sustaining its reputation as a reliable, forwardlooking partner.

FY25 Performance Review

Financial, Operational, and Product Performance

FY25 was a strong year for the Company, delivering the highest- ever revenue and profitability in its history. This performance was driven by sustained strength across the product portfolio, a supportive demand environment and high capacity utilisation across

manufacturing facilities. The Company maintained its leadership position in its product categories, demonstrating resilience and operational efficiency.

During the year, certain challenges emerged in specific areas. Performance in the NMMO product line moderated as heightened competition from Chinese suppliers, who continued to offer products at lower prices, exerted pressure on realisations. Despite this, the Company advanced its strategy of product diversification and innovation, deepening engagement with multinational companies for the development of niche offerings. These initiatives involve long development timelines; however, the Company remains committed to bringing these new products to market to drive long-term growth.

Looking ahead, the external environment presents certain headwinds. Global economic and geopolitical uncertainties, along with evolving tariff regimes and supply chain volatility, have led to a moderation in order inflows as some customers await greater clarity. Conditions remain dynamic, with multiple variables influencing demand patterns.

Despite this backdrop, the Company expects its domestic business to remain robust in FY26. Continued focus on expanding the product portfolio, deepening collaborations with global partners and executing on strategic growth priorities is expected to create sustained value for stakeholders while reinforcing the Companys market leadership.

	CONSOLIDATED		Standalone
	2024-25	2023-24	2024-25	2023-24
Total Income	661.96	649.71	656.60	647.39
EBITDA	70.26	71.82	69.13	71.06
Profit before Tax (PBT)	54.89	53.61	53.78	53.08
Profit for the year (PAT)	41.00	39.83	39.89	39.30

Risk Management

Operational Risk	Risk of disruption in the supply of raw materials or essential utilities, which could affect production schedules and overall business continuity.	The Company maintains adequate inventories calibrated to existing order books and sustains strong relationships with suppliers to ensure uninterrupted material flow. A long-term agreement with a solar power provider guarantees concessional energy supply. Investment in a professional Research and Development Team, comprising experienced and emerging talent, underpins ongoing product innovation and supports operational resilience.
Economic Risk	Exposure to volatile geopolitical conditions and fluctuating market dynamics, which may affect sales performance and market reach.	Management actively seeks to mitigate the impact of external uncertainties by expanding into new chemical markets, cultivating relationships with additional customers and focusing Research and Development efforts on unique specialty products. The Company continues to strengthen its presence in both domestic and international markets, thereby broadening its revenue base.
Ecological Risk	Risk arising from evolving environmental standards, compliance requirements and increased demand for sustainable solutions.	The Companys Research and Development team emphasises carbon capture utilisation and green chemistry. Initiatives include development of gas treating solvents for hydrogen, as well as carbon capture solutions with bespoke formulations tailored to customer needs, supporting long-term ecological sustainability and regulatory compliance.
Financial Risk Say	Risk of constrained access to timely and cost-effective funding, which may impact liquidity and growth initiatives.	The Company benefits from a consortium arrangement with leading banks, with credit facilities anchored by State Bank of India as the lead banker to ensure reliable financial support. Additional resources are secured through acceptance of unsecured deposits at favourable interest rates, thereby maintaining funding flexibility for corporate purposes.

Key Financial Ratios

(Standalone)

PARTICULARS	FY24	FY25	% CHANGE
Current Ratio	2.17	2.52	16.13
Operating Profit Margin (%)	9.87	9.54	(3.34)
Profit Before Tax (%)	8.23	8.16	(0.85)
Profit After Tax (%)	6.09	6.04	(0.82)
Return on Networth (%)	18.04	15.56	(13.75)
Debt to Equity Ratio	0.39	0.30	(23.08)
Return on Investment (%)	19.70	16.88	(14.31)
Debtors Turnover Ratio	5.82	5.85	0.52
Inventory Turnover Ratio	5.37	5.12	(4.66)
Interest Coverage Ratio	4.46	5.61	25.78*

*The Interest Coverage Ratio improved on account of decrease in utilisation of borrowings during the year and reduction of other finance costs.

Internal Control Systems and Their Adequacy

The Company maintains a robust internal control and risk mitigation system, which is regularly assessed and enhanced through the implementation of updated standard operating procedures. The internal control framework is commensurate with the scale, size and complexity of the Companys operations. M/s N. J. Mahtani & Co., Chartered Accountants, serve as the internal auditors and conduct independent audits that focus on evaluating business risks, testing controls and critically reviewing business processes, with benchmarking against the best practices in the industry.

During the year under review, the Board of Directors did not identify any risk elements that could threaten the going concern status of the Company. While risks are inherent in any business, these are managed through a comprehensive risk management framework. The internal control systems are reviewed periodically in light of the evolving economic and global landscape, to ensure the effectiveness of internal financial controls and adherence to statutory requirements and applicable laws. The Audit Committee of the Board actively reviews the adequacy and effectiveness of internal controls and recommends improvements as required. The Committee utilises insights from the Management Information System, which forms an integral part of the Companys control mechanism.

Comprehensive policies and procedures have been established by the Management to guide business operations. Unit and Functional Heads are accountable for ensuring alignment with these policies and procedures. Internal controls are subject to regular reviews by the Management, as well as by the Statutory and Internal Auditors to ensure continued adequacy and effectiveness.

Human Resource Management

Human resources continue to be a cornerstone of the Companys sustained success. The sector in which the Company operates demands both functional excellence and in-depth technical expertise.

The Company, by reinforcing its core values of Trust,

Skill, Quality and Excellence, has cultivated a dynamic and engaged workforce that upholds an agile and high-performance organisational culture. Leadership development remains a focus, with high-potential talent being identified and nurtured through targeted programmes.

The Company invests in employee development through a range of initiatives such as seminars, webinars and training courses, encouraging individuals to continuously upgrade their technical, functional and behavioural competencies. Technical and safety-related training is provided regularly to ensure the workforce adheres to the highest operational standards. The Companys HR strategy encompasses all critical aspects of employee engagement, development and wellbeing, with an emphasis on fostering a collaborative and growth-oriented work environment.

As at 31^st March 2025, the Company employed 269 individuals. Industrial relations throughout the year remained harmonious and cordial at all levels. The Company recognises the pivotal role its people play in maintaining the leadership position in the chemical sector and remains committed to nurturing talent, promoting learning and advancing a culture of excellence.

Cautionary Statement

Amines & Plasticizers Limited may, from time to time, make forward-looking statements through various communications, including filings with the BSE, NSE and website updates and reports issued to shareholders. These statements are intended to reflect management expectations and projections based on currently available information. However, the Company does not undertake any obligation to revise or update such statements retrospectively. All content presented in this report has been prepared exclusively by Amines & Plasticizers Limited. The Company accepts no liability for any loss or consequence arising from the use of, reliance on, or interpretation of this Annual Report or its contents.